Ivie v. Smith
| Decision Date | 08 July 2014 |
| Docket Number | No. SC 93872.,SC 93872. |
| Court | Missouri Supreme Court |
| Parties | Richard E. IVIE, Jimmie R. Ivie, Ladonna Small, and Bernard Ivie, Respondents, v. Arnold L. SMITH and Sidney B. Smith, Appellants. |
Joseph C. Blanton Jr., Shaun D. Hanschen, Blanton, Rice, Nickell, Cozean & Collins LLC, Sikeston, for Appellants.
Bruce Lawrence, R. Kye Lawrence, Lawrence & Lawrence LLC, Sikeston, for Respondents.
Arnold and Sidney Smith (collectively, “Smith”) appeal the circuit court's judgment declaring changes to an estate plan void due to lack of testamentary capacity and undue influence. Patricia Watson created a trust in 2002, which left substantially all of her property to her half siblings. The trust expressly excluded Arnold Smith, her husband. Several years later, after Watson's mental health had deteriorated, Watson signed two separate amendments to her trust, signed changes to beneficiary designations on her bank accounts and retirement accounts, and signed documents retitling several of her accounts and vehicles. The effect was that almost all of Watson's personal property passed to Smith when Watson died. Her half siblings sued and prevailed in a court-tried case. Because this Court holds that the circuit court's judgment that Watson lacked capacity is supported by the record and is not against the weight of the evidence, there is no need to address the undue influence claims. The circuit court's judgment is affirmed.
Watson, the decedent, was raised in Missouri. Early in life, she took a job teaching elementary school in the state of California. Despite the distance, she retained close ties with her half siblings, Richard Ivie, Jimmie Ivie, Ladonna Small, and Bernard Ivie (“the Ivies”). Watson had three previous husbands before she married Smith, and she had only one child, a daughter who was murdered in 1980.
Watson retired from teaching in February 2002, and she married Smith on February 20, 2002, in California. At the time of their marriage, Watson was 70 years old and Smith was 60 years old. Watson had substantial income and approximately $1 million in assets. This included her home in California, several parcels of real estate in southeast Missouri, a pension from the California State Teachers' Retirement System (CALSTRS), and several bank accounts, retirement accounts, and vehicles. Smith, on the other hand, had filed for bankruptcy in 1997 and had minimal income and assets. The two lived together in Watson's California home until moving to Missouri in 2004.
Watson created her original trust on May 9, 2002, about three months after marrying Smith. At the same time, Watson also created a will with a provision “pouring over” all of her estate's assets into the trust. Although they were living in California at the time, Watson's Missouri attorney, Reginald Young, prepared the documents.
Watson wanted the trust to own all of her property so she could retain control over it. Both Watson and Smith signed deeds conveying all of Watson's real estate to the trust. When they moved back to Missouri, they placed the proceeds from the sale of the California home in the trust and deeded the new Missouri home to the trust. The trust also owned or was the beneficiary of several of Watson's bank and retirement accounts.
The Ivies were the sole beneficiaries of the trust. Under its original terms, the Ivies were to divide the trust assets and proceeds equally. The trust also stated: “It is expressly the Grantor's intention that her husband, Arnold L. Smith, not receive any part of the Trust Estate.”
Watson began showing signs that her mental health was progressively deteriorating long before signing an amendment to the trust for the first time on July 27, 2007. As early as January 2003, she saw a physician for physical ailments. The physician noted in his report:
Watson and Smith moved to Missouri in late 2004. Around this time, Watson told her sister that she was having trouble remembering words and names. According to her sister, Watson wanted a divorce from Smith because he had ruined her life. Watson also told one of her brothers that she thought she was losing her mind, that she was afraid of Smith, and that she thought he was trying to poison her.
Watson visited several physicians in 2005, complaining in part about memory loss. Early in 2005, one of her physicians prescribed Namenda
, a drug used to treat moderate to severe dementia.2 She persisted in her belief that Smith was trying to poison her. Another physician noted that she was “perhaps somewhat paranoid” but ordered poisoning tests anyway. Although she accepted that the results were within normal limits, she maintained that she had been poisoned for the previous four years.
Watson had a neuro-psychological evaluation at the Mayo Clinic in October 2005. She told the physicians she had trouble with forgetfulness and that she could not think. She reported that, since her daughter had been killed in 1980, “I haven't been the same.” According to the physician's report, Smith told the physician that Watson's word-finding abilities had gradually worsened over the prior six months. Smith also told the physician that Watson had trouble following instructions and remembering things, trouble with misplacing things, disorganization in thinking, and loss of train of thought mid-conversation. In addition, Smith mentioned that Watson had trouble managing her checkbook and that she had allowed him to take over. During testing procedures, Watson was impatient with long instructions, which often needed to be simplified so she could understand.
The test results showed “a mild to moderate degree of cognitive impairment,” which “likely” reflected an abnormality that had appeared on brain imaging
tests. The report stated that Watson would “require continued supervision and assistance with complex activities of daily living, including assistance with any medical, legal, or financial decision-making.” The Mayo Clinic physician concluded that Watson's condition was most consistent with a diagnosis of vascular dementia. He recommended ongoing monitoring because he could not rule out a “neurodegenerative process.”
As time passed, it became apparent that Watson's mental condition was getting worse. She began seeing a new physician in March 2006, complaining in part about progressive problems with short-term memory. Although Watson's only child had been murdered in 1980, she apparently told the physician she had “[o]ne child, alive and well.” The same physician diagnosed probable Alzheimer's dementia
in October 2006 and stated without qualification in November 2006 that the diagnosis was Alzheimer's dementia. He prescribed her Aricept, which is used to treat Alzheimer's disease.
Before Watson executed the first trust amendment, she was no longer able to care for herself and was dependent on help from others. She needed help with all of her daily living activities, including walking, bathing, dressing
, preparing meals, using the telephone, driving, getting in and out of the car, and walking up and down stairs. By May 2007, at a family gathering, Watson did not recognize the children of one of her brothers and other previously known family members.
Soon after, she went to the hospital for physical problems. The hospital records show that on June 25, 2007, she was “confused” and “oriented to self only,” that she was non-responsive to the nurses' attempts to orient her “to time and place,” and that she made inappropriate statements suggesting impaired memory. The treating physician diagnosed her with “[m]ild dementia
, probably Alzheimer's disease ” and recommended increasing her Aricept prescription. He also recommended further testing and suggested supplementing with Namenda if the dementia worsened. She left the hospital June 29, 2007.
On July 10, 2007, Watson had a meeting with her attorney, Young, about executing a power of attorney. Her sister testified that Watson understood what was going on at that meeting. Apparently, Watson told the Ivies at some point that she was going to give them each $25,000. Roughly one month after leaving the hospital, on July 27, 2007, Watson signed the first trust amendment decreasing the Ivies' share of her property and granting Smith a share. Each of the Ivies would now receive $25,000 upon her death. Smith would receive the remainder. The amendment also added a “no-contest” clause, because of an apparent conflict between Smith and the Ivies, the purpose of which was to cause anyone challenging the trust to lose his or her share.
Watson's attorney, Young, prepared the amendment. According to Young, Watson had spoken with him several times in July leading up to the signing of the first trust amendment, both on the telephone and in person. Young testified that Watson had changed her mind about not including Smith in the trust since their marriage five years before because she realized Smith would receive nothing when she died. He also testified that Watson understood what was going on and that, by amending the trust, she was leaving most of her property to Smith. However, Young did not know she had been diagnosed with dementia
. He admitted at trial that, had he known about the diagnosis, it would have caused concern.3
Watson's mental health continued to worsen. At some point after July 2007, she visited one of her neighbors and took off her own clothes in the neighbor's living room. She began receiving in-home nursing care in November 2007. The nurses' reports reflect that Watson's dementia
was uncontrolled, she answered questions...
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